SolutionManual
Foundationsof̣Business7thEdition
ByWilliamM.Pride,Allchapter1-47
,Chapter 1 A
End of̣ Chapter Questions
A A A
QuizAYourself̣
ScarcityAimpliesAAthatAAtheAAallocationAAdecisionAAchosenAAbyAsocietyAcan
notAAmakeAAmoreAAof̣AAanyAoneAAgood.
alwaysAAmakeAmoreAAof̣AAanyAgood.
typicallyAmakeAmoreAof̣AoneAgoodAbutAatAtheAexpenseAof̣AmakingAless
Aof̣Aanother.
alwaysAAmakeAAmoreAAof̣AAallAAgoodsAAsimultaneously.
Explanation:AScarcityAimpliesAthatAchoicesAinvolveAtrade-
of̣f̣s.
AACSB:AARef̣lectiveAAThinkingAAAcces
sibility:AKeyboardANavigationAABloom
s:AAUnderstand
Dif̣f̣iculty:AA02AAMediumAAGra
deable:AAautomaticAALearning
Objective:A01-01
Topic:AAEconomicsAAandAAOpportunityACost
AAproductionAApossibilitiesAAf̣rontierAisAAaAsimpleAmodelAAof̣
a) allocatingAscarceAinputsAtoAtheAproductionAof̣AalternativeAoutputs.
priceAandAAproduction/consumptionAAinAAaAAmarket.
theAAcostAAof̣AAproducingAAgoods.
theAAnumberAAof̣AAinputsAArequiredAAtoAAproduceAAvaryingAAlevelsAAof̣AAoutput.AAExp
lanation:ATheAproductionApossibilitiesAf̣rontierAshowsAtheAquantityAof̣AtwoAgoodsAtAhatA
canAbeAproduced.AItAimpliesAthatAscarcityArequiresAthatAchoicesAbeAmadeAasAtAoAhowAtoA
useAresources.
AACSB:AARef̣lectiveAAThinkingAAAcces
sibility:AKeyboardANavigationAABloom
s:AAUnderstand
Dif̣f̣iculty:AA02AAMediumAAGra
deable:AAautomaticAALearning
Objective:A01-01
Topic:AAModelingAOpportunityACostAAUsingAtheAAProductionAAPossibilitiesAAFrontier
,TheAunderlyingAreasonAthatAthereAareAunattainableApointsAonAaAproductionApossiAbilit
iesAf̣rontierAisAthatAthere
isAAgovernment.
areAalwaysAAchoicesAAthatAAmustAAbeAAmade.
areAscarceAresourcesAAwithinAaAf̣ixedAlevelAof̣Atechnology.
isAunemploymentAAof̣AAresources.
Explanation:ATheApointsAoutsideAtheAproductionApossibilitiesAf̣rontierAareAunattainableA.AT
hisAmeansAthatAcurrentlyAavailableAresourcesAandAtechnologyAareAinsuf̣f̣icientAtoAproduceA
amountsAgreaterAthanAthoseAillustratedAonAtheAf̣rontier.AOnAaAgraph,AeverytAhingAbeyondAt
heAf̣rontierAisAunattainable.
AACSB:AARef̣lectiveAAThinkingAAAcces
sibility:AKeyboardANavigationAABloom
s:AARemember
Dif̣f̣iculty:AA01AAEasyAAGradea
ble:AAautomaticAALearningAOb
jective:A01-01
Topic:AAModelingAOpportunityACostAAUsingAtheAAProductionAAPossibilitiesAAFrontier
TheAunderlyingAreasonAproductionApossibilitiesAf̣rontiersAareAlikelyAtoAbeAbowAedA
outA(ratherAthanAlinear)AisAbecause
choicesAAhaveAconsequences.
thereAAareAAalwaysAAopportunityAcosts.
someAresourcesAandApeopleAcanAbeAbetterAusedAproducingAoneAgoodArat
herAthanAanother.
thereAisAAalwaysAAsomeAlevelAAof̣AAunemployment.
Explanation:AAIf̣AAtheAAproductionAApossibilitiesAAf̣rontierAAisAAnotAAaAAlineAAbutAAisAAbowedAA
outAawayAf̣romAAtheAAorigin,AAthenAAopportunityAAcostAAisAAincreasing.AATheAAreasonAAf̣orAAthi
sAAisAthatAAasAAweAAaddAAmoreAAresourcesAAtoAAtheAAproductionAAof̣,AAf̣orAAexample,AApizza,AA
weAAareAusingAAf̣ewerAAresourcesAAtoAAproduceAAsoda.AACompoundingAAthatAAproblem,AAatAAe
achAAstageAasAAweAAtakeAAtheAAresourcesAAawayAf̣romAAsodaAAandAAputAAthemAAintoAApizza,AAw
eAAareAAmoviAngAAworkersAAwhoAAareAAworseAAatAApizzaAAproductionAAandAAbetterAAatAAsodaAA
productionAAthan
thoseAmovedAinAtheApreviousAstage.AThisAmeansAthatAtheAincreaseAinApizzaAproductAionAis
Adiminishing AandAtheAlossAinAsodaAproductionAisAincreasing.AAnAeconomistAwAouldAcallAthi
sAanAexampleAof̣AincreasingAopportunityAcost.AIf̣AtheAproductionApossibiAlitiesAf̣rontierAisAaA
straightAlineAthatAisAnotAbowedAoutAawayAf̣romAtheAorigin,AthenAopportunityAcostAisAconsta
nt.
AACSB:AAKnowledgeAAApplicationAAA
ccessibility:AKeyboardANavigationAABl
ooms:AARemember
Dif̣f̣iculty:AA01AAEasyAAGradea
ble:AAautomaticAALearningAOb
jective:A01-02
Topic:AAAttributesAAof̣AAtheAProductionAAPossibilitiesAAFrontier
, SupposeAyouAwereAmodelingAtheAimpactAof̣AtheAintroductionAof̣AcomputerAautoAmat
ionAintoAmanuf̣acturingAonAaAproductionApossibilitiesAf̣rontierA(PPF)AwithAtwoAmanuf̣act
uredAgoodsAonAtheirArespectiveAaxes.AItAwouldAbeAmoreAlikelyAthatAtheAr
esultAAwouldAAbe .
generalizedAgrowthAwithAtheAPPFAmovingAbothAupAandAAtoAtheAright.
specializedAAgrowthAAwithAAtheAAPPFAmovingAbothAAupAAandAAtoAAtheAAright.
generalizedAAgrowthAAwithAAtheAAPPFAjustAAmovingAupAAandAAnotAAtoAAtheAAright.
specializedAgrowthAwithAtheAPPFAjustAmovingAupAandAnotAtoAtheAright.AEAxplana
tion:AComputerAautomationAisAaAgeneralAimprovementAinAtechnologyAsoAitAwouldAimpro
veAallAmanuf̣acturing.AAsAaAresult,AitAwouldAresultAinAgeneralizedAgroAwthAandAmoveAth
eAPPFAbothAupAandAtoAtheAright.
AACSB:AAKnowledgeAAApplicationAAA
ccessibility:AKeyboardANavigationAABl
ooms:AARemember
Dif̣f̣iculty:AA01AAEasyAAGradea
ble:AAautomaticAALearningAOb
jective:A01-
03AATopic:AAEconomicAAGrowt
h
TheAoptimizationAAassumptionAsuggestsAAthatAApeopleAAmake
irrationalAAdecisions.
unpredictableAdecisions.
decisionsAtoAmakeAthemselvesAasAwellAof̣f̣AasApossible.
decisionsAAwithoutAAthinkingAveryAhard.
Explanation:ATheAoptimizationAassumptionAsuggestsAthatAtheApersonAinAquestionAisAtryi
ngAtoAmaximizeAsomeAobjective.AConsumersAareAassumedAtoAbeAmakingAdecisiAonsAthatA
maximizeAtheirAhappinessAsubjectAtoAaAscarceAamountAof̣Amoney.
AACSB:AARef̣lectiveAAThinkingAAAcces
sibility:AKeyboardANavigationAABloom
s:AARemember
Dif̣f̣iculty:AA01AAEasyAAGradea
ble:AAautomaticAALearningAOb
jective:A01-01
Topic:AAThinkingAEconomically
Foundationsof̣Business7thEdition
ByWilliamM.Pride,Allchapter1-47
,Chapter 1 A
End of̣ Chapter Questions
A A A
QuizAYourself̣
ScarcityAimpliesAAthatAAtheAAallocationAAdecisionAAchosenAAbyAsocietyAcan
notAAmakeAAmoreAAof̣AAanyAoneAAgood.
alwaysAAmakeAmoreAAof̣AAanyAgood.
typicallyAmakeAmoreAof̣AoneAgoodAbutAatAtheAexpenseAof̣AmakingAless
Aof̣Aanother.
alwaysAAmakeAAmoreAAof̣AAallAAgoodsAAsimultaneously.
Explanation:AScarcityAimpliesAthatAchoicesAinvolveAtrade-
of̣f̣s.
AACSB:AARef̣lectiveAAThinkingAAAcces
sibility:AKeyboardANavigationAABloom
s:AAUnderstand
Dif̣f̣iculty:AA02AAMediumAAGra
deable:AAautomaticAALearning
Objective:A01-01
Topic:AAEconomicsAAandAAOpportunityACost
AAproductionAApossibilitiesAAf̣rontierAisAAaAsimpleAmodelAAof̣
a) allocatingAscarceAinputsAtoAtheAproductionAof̣AalternativeAoutputs.
priceAandAAproduction/consumptionAAinAAaAAmarket.
theAAcostAAof̣AAproducingAAgoods.
theAAnumberAAof̣AAinputsAArequiredAAtoAAproduceAAvaryingAAlevelsAAof̣AAoutput.AAExp
lanation:ATheAproductionApossibilitiesAf̣rontierAshowsAtheAquantityAof̣AtwoAgoodsAtAhatA
canAbeAproduced.AItAimpliesAthatAscarcityArequiresAthatAchoicesAbeAmadeAasAtAoAhowAtoA
useAresources.
AACSB:AARef̣lectiveAAThinkingAAAcces
sibility:AKeyboardANavigationAABloom
s:AAUnderstand
Dif̣f̣iculty:AA02AAMediumAAGra
deable:AAautomaticAALearning
Objective:A01-01
Topic:AAModelingAOpportunityACostAAUsingAtheAAProductionAAPossibilitiesAAFrontier
,TheAunderlyingAreasonAthatAthereAareAunattainableApointsAonAaAproductionApossiAbilit
iesAf̣rontierAisAthatAthere
isAAgovernment.
areAalwaysAAchoicesAAthatAAmustAAbeAAmade.
areAscarceAresourcesAAwithinAaAf̣ixedAlevelAof̣Atechnology.
isAunemploymentAAof̣AAresources.
Explanation:ATheApointsAoutsideAtheAproductionApossibilitiesAf̣rontierAareAunattainableA.AT
hisAmeansAthatAcurrentlyAavailableAresourcesAandAtechnologyAareAinsuf̣f̣icientAtoAproduceA
amountsAgreaterAthanAthoseAillustratedAonAtheAf̣rontier.AOnAaAgraph,AeverytAhingAbeyondAt
heAf̣rontierAisAunattainable.
AACSB:AARef̣lectiveAAThinkingAAAcces
sibility:AKeyboardANavigationAABloom
s:AARemember
Dif̣f̣iculty:AA01AAEasyAAGradea
ble:AAautomaticAALearningAOb
jective:A01-01
Topic:AAModelingAOpportunityACostAAUsingAtheAAProductionAAPossibilitiesAAFrontier
TheAunderlyingAreasonAproductionApossibilitiesAf̣rontiersAareAlikelyAtoAbeAbowAedA
outA(ratherAthanAlinear)AisAbecause
choicesAAhaveAconsequences.
thereAAareAAalwaysAAopportunityAcosts.
someAresourcesAandApeopleAcanAbeAbetterAusedAproducingAoneAgoodArat
herAthanAanother.
thereAisAAalwaysAAsomeAlevelAAof̣AAunemployment.
Explanation:AAIf̣AAtheAAproductionAApossibilitiesAAf̣rontierAAisAAnotAAaAAlineAAbutAAisAAbowedAA
outAawayAf̣romAAtheAAorigin,AAthenAAopportunityAAcostAAisAAincreasing.AATheAAreasonAAf̣orAAthi
sAAisAthatAAasAAweAAaddAAmoreAAresourcesAAtoAAtheAAproductionAAof̣,AAf̣orAAexample,AApizza,AA
weAAareAusingAAf̣ewerAAresourcesAAtoAAproduceAAsoda.AACompoundingAAthatAAproblem,AAatAAe
achAAstageAasAAweAAtakeAAtheAAresourcesAAawayAf̣romAAsodaAAandAAputAAthemAAintoAApizza,AAw
eAAareAAmoviAngAAworkersAAwhoAAareAAworseAAatAApizzaAAproductionAAandAAbetterAAatAAsodaAA
productionAAthan
thoseAmovedAinAtheApreviousAstage.AThisAmeansAthatAtheAincreaseAinApizzaAproductAionAis
Adiminishing AandAtheAlossAinAsodaAproductionAisAincreasing.AAnAeconomistAwAouldAcallAthi
sAanAexampleAof̣AincreasingAopportunityAcost.AIf̣AtheAproductionApossibiAlitiesAf̣rontierAisAaA
straightAlineAthatAisAnotAbowedAoutAawayAf̣romAtheAorigin,AthenAopportunityAcostAisAconsta
nt.
AACSB:AAKnowledgeAAApplicationAAA
ccessibility:AKeyboardANavigationAABl
ooms:AARemember
Dif̣f̣iculty:AA01AAEasyAAGradea
ble:AAautomaticAALearningAOb
jective:A01-02
Topic:AAAttributesAAof̣AAtheAProductionAAPossibilitiesAAFrontier
, SupposeAyouAwereAmodelingAtheAimpactAof̣AtheAintroductionAof̣AcomputerAautoAmat
ionAintoAmanuf̣acturingAonAaAproductionApossibilitiesAf̣rontierA(PPF)AwithAtwoAmanuf̣act
uredAgoodsAonAtheirArespectiveAaxes.AItAwouldAbeAmoreAlikelyAthatAtheAr
esultAAwouldAAbe .
generalizedAgrowthAwithAtheAPPFAmovingAbothAupAandAAtoAtheAright.
specializedAAgrowthAAwithAAtheAAPPFAmovingAbothAAupAAandAAtoAAtheAAright.
generalizedAAgrowthAAwithAAtheAAPPFAjustAAmovingAupAAandAAnotAAtoAAtheAAright.
specializedAgrowthAwithAtheAPPFAjustAmovingAupAandAnotAtoAtheAright.AEAxplana
tion:AComputerAautomationAisAaAgeneralAimprovementAinAtechnologyAsoAitAwouldAimpro
veAallAmanuf̣acturing.AAsAaAresult,AitAwouldAresultAinAgeneralizedAgroAwthAandAmoveAth
eAPPFAbothAupAandAtoAtheAright.
AACSB:AAKnowledgeAAApplicationAAA
ccessibility:AKeyboardANavigationAABl
ooms:AARemember
Dif̣f̣iculty:AA01AAEasyAAGradea
ble:AAautomaticAALearningAOb
jective:A01-
03AATopic:AAEconomicAAGrowt
h
TheAoptimizationAAassumptionAsuggestsAAthatAApeopleAAmake
irrationalAAdecisions.
unpredictableAdecisions.
decisionsAtoAmakeAthemselvesAasAwellAof̣f̣AasApossible.
decisionsAAwithoutAAthinkingAveryAhard.
Explanation:ATheAoptimizationAassumptionAsuggestsAthatAtheApersonAinAquestionAisAtryi
ngAtoAmaximizeAsomeAobjective.AConsumersAareAassumedAtoAbeAmakingAdecisiAonsAthatA
maximizeAtheirAhappinessAsubjectAtoAaAscarceAamountAof̣Amoney.
AACSB:AARef̣lectiveAAThinkingAAAcces
sibility:AKeyboardANavigationAABloom
s:AARemember
Dif̣f̣iculty:AA01AAEasyAAGradea
ble:AAautomaticAALearningAOb
jective:A01-01
Topic:AAThinkingAEconomically
